Climate change poses a grave threat to the international community, thus prompting global action on all fronts. Various ‘green energy programs’ are being adopted by many governments. To the extent that governmental support is indispensable for the initiation and maintenance of these green energy programs, the SCM Agreement is directly implicated in this regard. Unfortunately, the agreement does not include any exceptions to these programs, even if the exceptions are undertaken due to the growing concerns of the global community. Under such circumstances, a practical solution should be found from within the existing framework, and be derived from an interpretation of the present SCM Agreement based on current jurisprudence. The collective jurisprudence of the WTO arguably stands for the proposition that certain renewable energy programs constitute ‘general infrastructure’ projects of a state, and thus are excluded from the financial contributions by the government under Article 1.1(a)(1)(iii) of the SCM Agreement.

1 For example, U.S. President Barack Obama mentioned in his 2015 State of the Union address that climate change is the most important feature of the national agenda of the United States at the moment and will be addressed as a new type of ‘national security’ issues in the future.

35 See Pal, Rajib, ‘Has the Appellate Body's Decision in Canada – Renewable Energy /Canada – Feed-in Tariff Program Opened the Door for Production Subsidies?’, Journal of International Economic Law, 17 (2014), at 129.

47 The nature of the R&D programs administered by the US federal government and state governments of the United States is well documented in recent subsidy disputes between the European Union and the United States. See World Trade Organization, Panel Report, United States–Measures Affecting Trade in Large Civil Aircraft, WT/DS353/R, adopted 31 March 2011 (US–Large Civil Aircraft (Panel)), at paras. 7.940–7.1257.

48 World Trade Organization, Panel Report, United States – Preliminary Determination with Respect to Certain Softwood Lumber from Canada, WT/DS236/R, adopted 14 April 1999, at para. 7.26 (‘[W]e find further confirmation of this broad meaning in the fact that the drafters of the Agreement considered it necessary to explicitly exclude ‘general infrastructure’ [in drafting] Article 1.1(a)(1)(iii) of the SCM Agreement’.)

49 See Canada–Aircraft (AB), at para. 9.119.

50 World Trade Organization, United States – Measures Affecting Trade in Large Civil Aircraft, DS353/DS317.

51 World Trade Organization, European Communities and Certain Member States – Measures Affecting Trade in Large Civil Aircraft, DS316/DS347.

53 The interpretation of the WTO covered agreement is governed by Articles 31 to 33 of the VCLT. Article 3(2) of the DSU provides that the DSB is to ‘clarify the existing provisions of those agreements in accordance with customary rules of interpretation of public international law’. Isabelle Damme, Treaty Interpretation by the WTO Appellate Body, Oxford: Oxford University Press, 2009, at 22. See also World Trade Organization, Appellate Body Reports, China – Measures Affecting Imports of Automobile Parts, WT/DS339/AB/R, WT/DS340/AB/R, WT/DS342/AB/R, adopted 15 December 2008, at para. 171; World Trade Organization, Appellate Body Report, United States – Measures Affecting Trade in Large Civil Aircraft (second complaint), WT/DS353/AB/R, adopted 12 March 2012 (US–Large Civil Aircraft (AB)), at para. 586; Canada–Renewable Energy/FIT (AB), at para. 5.120.

54The Concise Oxford English Dictionary defines ‘general’ as ‘affecting or concerning all or most people or things; not specialised or limited’. See Catherine Soanes and Angus Stevenson (eds.), Concise Oxford English Dictionary, 11th edn, Oxford University Press, 2004, at 592. ‘Infrastructure’, in turn, is defined as ‘the basic physical and organizational structures (e.g. buildings, roads, power supplies) needed for the operation of a society or enterprise’. See ibid., at 730.

55 In EC–Large Civil Aircraft, when exploring the meaning of the ‘general infrastructure’, the panel highlighted the importance of managing the program in question over time for it to be eligible for general infrastructure. For instance, it pointed out that general infrastructure at one point in time may not be general infrastructure at other times. See World Trade Organization, Panel Report, European Communities – Measures Affecting Trade in Large Civil Aircraft, WT/DS316/R, adopted 18 May 2011 (EC–Large Civil Aircraft (Panel)), at para. 7.1044.

59 General infrastructure is the only explicit carve-out for financial contribution by the government under Article 1.1(a)(1).

60 See BBC Monitoring South Asia, ‘Nepal pitches for foreign investment in energy, connectivity’, London, 29 January 2015; Accord Fintech, ‘Gov't to take special measures to boost public spending for infrastructure development: Finance Minister’, Mumbai, 20 January 2015; Asia News Monitor, ‘Thailand: Government Accelerating Infrastructure Development in Special Economic Zones’, Bangkok, 27 January 2015. Establishment of infrastructure is particularly essential because the absence or lack of it generally leads to the inability to take advantage of the benefit of trade agreements in the first place. See Douglas Brooks, Benno Ferrarini, and Eugenia Go, ‘Bilateral Trade and Food Security’, ADB Economics Working Paper Series No. 367, September 2013, at 20.

65 According to the UK Government, key infrastructure sectors include transportation, energy, communication/digital, water, and intellectual capitals, etc. An inference can be made that national software such as electricity generating and distribution system and cyber networks can also constitute general infrastructure. See The UK Government, Infrastructure Policy (SN/EP/6594), 9 December 2014, at 5; One example of such software infrastructure is said to be GIS (Geographic Information System), http://education.nationalgeographic.com/education/encyclopedia/geographic-information-system-gis/?ar_a=1 (accessed 18 March 2016).

77 In this dispute, the Appellate Body only held in this particular dispute that what was created by EC and what was provided to Airbus are not exactly the same. As the panel viewed the two as identical, to that extent the Appellate Body modified the panel finding.

79 Thus, the provision of infrastructure to a specific recipient, which, by reference to its technical requirements and use, is only suitable to the needs of that recipient, would fall outside the scope of ‘general infrastructure’, thus constituting financial contribution by a government as provided for in Article 1.1(a)(1)(iii) of the SCM Agreement.

95 It is noteworthy that UNCTAD and OECD reports regard national projects for the promotion of sustainable energy as one type of basic infrastructure. See United Nations Conference on Trade and Development, Promoting Investment for Development: Best Practices in Strengthening Investment in Basic Infrastructure in Developing Countries – a Summary of UNCTAD's Research on FDI in Infrastructure, TD/B/C.II/12, 11 February 2011, at 3; OECD, Enabling Investment in Sustainable Energy Infrastructure, OECD Post-2015 Reflections Series, Element 4, Paper 2.

105 Preventing circumvention is an important objective of the SCM Agreement, which should be taken into account when interpreting the SCM Agreement. See US–Softwood Lumber IV (AB), at para. 64.

106 See EC–Large Civil Aircraft (Panel), at para. 7.1038.

The draft form of this manuscript was presented at the Symposium on International Trade Law and Policy Relating to Natural Resources, Energy and Environment: Perspective on Sustainable Development held in Tokyo on 2–3 March 2015.